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Defense contractor DynCorp reaps two-thirds of State Dept.'s Afghanistan reconstruction dollars

Washington Examiner
April 25, 2014
Michal Conger
A single defense contractor -- one that has faced allegations of poor performance -- raked in more than two-thirds of the $4 billion the State Department has spent rebuilding Afghanistan in recent years, a government watchdog says.
DynCorp International, a Virginia-based company that is one of the federal government's largest contractors, won $2.8 billion in State Department contracts between 2002 and last year, primarily to train and equip law enforcement and counter-narcotics forces in the war-torn country, according to a new report by the Special Inspector General for Afghanistan Reconstruction (SIGAR).
PAE Government Services, another Northern Virginia company sometimes grouped with DynCorp as "private military contractors" or PMCs, received the second-largest piece of State's Afghanistan pie. It won slightly less than $600 million in contracts, less than a quarter of DynCorp's share.
"It is a problem that companies like DynCorp -- with a fairly extensive track record of contract performance problems and other ethical lapses in Afghanistan -- are getting such a large share of State's reconstruction money," said Neil Gordon, an investigator with Washington nonprofit Project on Government Oversight (POGO).
DynCorp, which employs 25,000 people worldwide, has provided a wide range of services for the U.S. government in southwest Asia, including construction and security. The international press reported in 2002 that the firm's employees were serving as bodyguards to Afghan President Hamid Karzai, a claim not mentioned in SIGAR's review.
At the same time, the company has been the subject of several allegations of poor work or misconduct in Afghanistan, Iraq and elsewhere.
The Army paid DynCorp nearly $73 million in 2010 for construction work at an Afghani army base in Kunduz Province that SIGAR said was substandard, including "major structural failures" of buildings. However, SIGAR closed its investigation into the matter in March with no findings of wrongdoing on DynCorp's part.
The firm said it did its best in less-than-ideal conditions before turning over the facility in early 2011, before the SIGAR investigation began.
"The company did everything possible - including providing work at no cost to the government - to deliver in challenging and unusual circumstances. In the end, [DynCorp International] completed the work but received only a partial payment, taking a total company loss of $26,306,672 for the two phases of the contract," a spokeswoman told the Washington Examiner.
DynCorp has also been involved in several false claims settlements with the federal government for law enforcement and counter-narcotics services in the Middle East and South America, according to POGO.
The company didn't comment on POGO's records.
Despite those issues, DynCorp was the 23rd-largest federal defense contractor in 2011, according to POGO, which works to expose misconduct and corruption in government. More than two-thirds of the company's $3.7 billion in revenue in 2012 came from federal contracts, both military and civilian, according to an analysis by Federal Computer Week magazine.
All told, the top five recipients -- DynCorp, PAE, Civilian Police International, Omran Consulting and an Afghan nongovernmental organization -- were awarded 87 percent, or $3.5 billion, of State's Afghanistan largesse. Each received at least $20 million in contracts.
By contrast, the other 766 contractors averaged about $676,000 each. State's contracts included tasks ranging from building Afghan army barracks to training for police and counter-narcotics agents, providing humanitarian aid, removing land mines and helping with economic development.
Many major defense contractors have settlements and lawsuits on their records similar to those of DynCorp. Lockheed Martin, for instance -- the nation's largest defense contractor and PAE Government Services' parent company until a few years ago -- has 59 mentions in POGO's Federal Contractor Misconduct Database, compared to DynCorp's 10. Boeing has 47, and Raytheon has 22.
But such problems shouldn't be "a cost of doing business" with major federal contractors, Gordon said.
About one-third of major federal contractors have zero or one mentions in the database, he noted.
"By law, the federal government should only be doing business with 'responsible contractors,' or those with satisfactory records of past performance, integrity, and business ethics," Gordon said.
"The two major causes for this state of affairs are governmental overreliance on contractors, and the pernicious influence of the revolving door between the government and large companies like DynCorp."
The company's board of directors includes retired Marine Corps Gen. Michael Hagee, the former Marine commandant, and retired Army Gen. John Tilelli. Michael Thibault, a former head of the Commission on Wartime Contracting in Iraq and Afghanistan and a former official at the Defense Contract Audit Agency, took a vice president's job at DynCorp in 2011, according to press reports from the time.
The company, which opened a new global headquarters earlier this year in Tysons Corner, Va., in the Washington suburbs, was bought four years ago for $1.5 billion by Cerberus Capital Management, the private equity firm whose varied holdings also include the Albertson's grocery store chain, the production company that made the movie "Get Him to the Greek" and the firearms manufacturer Remington. Cerebus is in the process of also buying the Safeway grocery store chain.
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